Bybit X Block Scholes Crypto Derivatives Analytics Report (May 28, 2025): Derivatives paint a bullish picture despite uncertainty surfacing after May 28

Key Highlights:

Our weekly crypto derivatives analytics report delves into macro events; the current state of crypto and trading signals from spot trading volume; and futures, options and perpetual contracts.

After BTC’s price reached a new all-time high on May 22, 2025, it entered a notably low-volatility period. Realized volatility across cryptocurrencies has decreased, resulting in lower short-term implied volatility. ETH now shows a flat term structure, while BTC’s has steepened as the 7-day tenor dropped below 40%. Options and futures markets have remained bullish, with positive futures yields and a preference for out-of-the-money calls. However, a decline in BTC’s spot price on May 28, 2025 has created uncertainty around funding rates.

Please check out the report’s highlights.

BTC options see high trading volume of put options as investors seek to protect their positions

BTC's recent rise to an all-time high has been characterized by unexpectedly low volatility in both spot returns and options prices. Short-dated volatility expectations have declined significantly, steepening a term structure that remains less inverted than ETH's even as BTC reaches new highs, while ETH is about 40% below its $4.6K peak. Unlike ETH, BTC put options have seen higher daily trade volume, peaking at $250M on May 21, 2025, as well as greater open interest when compared to call options. Despite this, BTC's options markets are still pricing out-of-the-money call options at a premium across the term structure, albeit lower than ETH's.

Ether derivatives signal optimism

After a brief dip in short-term bearish expectations for BTC and ETH, outlooks have improved as BTC is trading sideways just below its all-time high. BTC's volatility smiles are skewed 2–3% in favor of calls, with a stronger tilt at the 7-day tenor. In contrast, ETH options have rebounded more decisively, with volatility smiles for tenors under 90 days showing a 4% premium for out-of-the-money calls over puts. Both markets exhibit bullish sentiment in perpetual swap funding rates and futures-implied yields, indicating traders are willing to pay a premium for continued bullish momentum.

However, funding rates show dampened sentiment

Since May 19, 2025 (at the start of BTC's rally to its recent all-time high), funding rates for all coins have remained positive, indicating strong demand for leveraged long exposure. This trend was evident across all tokens during the rally. However, on May 28, 2025, BTC fell from $109K to $107K, causing its funding rates to turn negative for the first time since May 15. While funding rates for other coins have moderated, they haven’t yet shifted negative as BTC's have done.

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